March 1, 2008 / 5:48 PM / 12 years ago

Sarkozy says EADS deal shows better U.S.-Europe ties

PARIS (Reuters) - French President Nicolas Sarkozy on Saturday hailed a big contract awarded by the United States Air Force to European aerospace group EADS EAD.PA and its U.S. partner as a sign of stronger U.S.-European relations.

EADS and Northrop Grumman Corp (NOC.N) landed the $35 billion U.S. Air Force refueling plane deal on Friday in the face of a rival bid by Boeing (BA.N), prompting Sarkozy to call it a success for Europe.

“It also marks an important advance in strengthening relations between the United States and Europe which, spurred on by the (French) president, owe a lot to the re-establishment of a confident dialogue between Paris and Washington,” Sarkozy’s office said in a statement.

EADS chief Louis Gallois also suggested that warmer political relations between the two countries might have helped.

“I pay tribute to the fairness of the U.S. administration... I think the new climate between France and the United States had something to do with it,” he told France’s TF1 television.

Franco-U.S. relations hit a low point when Sarkozy’s predecessor Jacques Chirac opposed the 2003 U.S.-led invasion of Iraq, prompting indignant Americans to boycott products such as French cheese and rename French fries as “freedom fries”.

But relations have warmed since Sarkozy’s election last May, with the French leader winning U.S. praise for taking a stronger stand against Iran.

The decision to award the contract to EADS could still be challenged by Boeing or its backers in Congress.

The Congressional delegation from the Seattle area, where Boeing has big facilities, said they were “outraged” and a Kansas Republican Congressman said he would seek a review of the decision.

TRANSPARENT ATMOSPHERE

Gallois said such a challenge could never be ruled out but told TF1 television on Saturday: “I have the feeling that the competition took place in a very transparent and very professional atmosphere.”

French Prime Minister Francois Fillon also welcomed the deal, saying it “testifies to the competitiveness of our industry and does honor to France and Europe.”

In Germany, the government’s coordinator for the aerospace industry, Peter Hintze, said the deal was “a massive breakthrough for the European aerospace industry on the key American market.”

Gallois told France Info radio the deal would mean job creation in Europe and the United States — welcome news for French politicians seeking to hold on to manufacturing jobs at a time when many firms are moving activities abroad.

“We are creating lots of jobs in the United States but we are also creating them in Europe,” Gallois said.

The European aerospace group would have more than half the workshare in building aerial refueling tankers for the United States Air Force, according to an advance copy of an interview Gallois gave to Sunday’s Journal du Dimanche newspaper.

Most French trade unions said they welcomed the deal, which will see the new U.S. tanker assembled in Mobile, Alabama, from parts mainly built in France, Germany, Britain, and Spain.

“You have to remember that we didn’t have facilities available in Europe to meet this order and ... we have other challenges to take up,” said Maryline Brugidoux, an Airbus delegate with the CFE-CGC union.

But Xavier Petrachi of the CGT union was less upbeat:

“This mega-order risks accelerating the implementation of the Power8 (cost) savings plan despite order books which are beating new records. In summary, you can say this U.S. order is excellent news for shareholders and bad news for employees.”

(additional reporting by Nicolas Fichot in Toulouse)

Reporting by Swaha Pattanaik; Editing by Sami Aboudi

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